Loans are not best for little businesses

[Nathaniel633]

Morning to you all. Most of you might have been discussing why loan are not best for little businesses yes, that right loan are not best for little businesses because you just started the business and you're already been challenged with someone barriers in your business because you are trying to get the business to Stand.
So at such point is not advisable to get a loan

 

[Kingsley]

You are right, it may not be so good for small businesses to depend on loans for either a start up or for the purpose of running the business, this is because loans will actually suck up the life of the business, mostly when the person trying to run the business is not so experienced in the line of business the person is running or trying to run. Just imagine a situation where a person borrows about $100 to start a very little business and the person will have to pay back 15% of the loan at a very short pay back period of two weeks because this what most loan applications are doing this days, now the total pay back will be $115 so tell me what will have to such a person person should anything goes wrong with that business, he will be forced to payback the interest and principal. And sometime the little profits that is been made is used to pay the interest and the money that should be capital is used to payback the principal of the loan. It is rather better to look for a job and work for sometime and gather some experience and money to start on one's own.

 

[Sotherefore]

Loan is not suitable for every business based on my understanding and I believe that someone who is operating a small business can easily get a loan to start up the business because here the loans will not be huge and it is something they can easily pay back even if the business is not successful .

But most bigger business are always the riskiest when they have gotten a loan to start up because that will require a huge amount of loan which may even be impossible to pay back if the business is not successful.

Whatever the reason may be anyone who is interested to get a loan to start up anything needs to really understand what it is involved in getting a loan because with that you can easily predict some of the things you are to expect with loans and also how you could pay back the loan.

Anyone who is just interested in starting up a business should not just wake up one day and get a loan to start up a business , nowadays starting up a business require a lot of proper planning and dedication and people should use such opportunity to raise the required money they need.

 

[funmi]

Loans truly are not best for small businesses as does not give the business the opportunity to grow. One thing I have realize over time is that those people who rely heavily on loan to run their businesses finds it very difficult to grow or expand. They seem to remain in a single spot for long and in some cases they eventually fold up. These are my personal findings. So starting up a business with loans are not the very best idea anyone can ever give or get mostly this unstable nature of this economy as you could end up borrowing less and pay back more in returns. Although on the other band I can't really blame it on people, I mean business men and women, who truly has no other means of survival and they depend solely on what they will get from all the loan organizations to be able to start up a business and cater for their needs and that of their family. To be more realistic it is not so.easy for them generally to start up their business without going for loams as some of them are not even educated enough to source for funds from other sources.

 

[Abigael]

I agree with you that loan is not truly suitable for small businesses. Small businesses usually require a small amount to start. That can be gotten from many different ways other than taking a loan.

If you are not able to raise small capital to start a small business, then it means you are not really financially well off to start a business. I prefer to take loans to start a bigger business. And that is only when I have other money and only need loan to add on it.

The best source of capital to start a business is your own savings or income. Which is very suitable because it could be a small amount that is just enough to start a small business. It is also a good source because you will start the business with a clear mind that does not plan on paying back loans.

You can also get the small capital from borrowing your family and friends. But most of them may require you to pay them back. Which is not so bad given that this won't come with a high amount of interest.

In conclusion, it is best to choose a great source of capital for your business startup. Taking loans with high interest is not the best option for small business startups.

 

[Alexandoy]

Let me share my observation in our town market regarding the vendors who are continually getting loans from the private lenders. The interest is high at 10% per month. What happens to those vendors with a small business of selling vegetables and other kitchen needs like garlic and onion, they repay the loan every day. That is the style of the lender that they give a loan of 1,000 and they collect the daily installment. After a month the vendor had paid a total of 1,100 plus the concept that installments have been paid every day in advance of the maturity date. One vendor admitted that after paying the loan in full she would take another loan. It has become a vicious cycle for those vendors. I thought that a small business is easy to handle but in reality when the business management is not proper then there is the tendency for the finances to sink. What those vendors are doing now is only for the survival of their business from day to day.

 

[Chibson]

If you have a small business and you are taking a loan or your plan to start a small business and you are taking a loan it is very important to know that you're wasting your time because it may actually not to be realizable.

Before taking a loan, you will understand that there is some interest attached to it in the sense that there must be a lot of sales volume in your business for you to be able to pay such a loan back at the right time and also reserve some funds for you to continue to run your business. like I always advise people, it is not advisable for you to take a loan if you are not experienced in business because there are a lot of barriers that comes with, but if you have experience and already running a business, you can easily manage the money well and expand your business to make a reasonable profit before the stipulated amount of time.

I have seen a lot of people who took loans to start certain businesses but at certain stage of the business, they begin to realise that they are not making any reasonable profit.

Some people even sold their properties to pay back the loans they have taken in order to venture into several business that supposed to give them a lot of profit. it is better for you to start small and grow the business instead of taking of loans.

 

[Augusta]

Yeah I have always been an advocate of one not starting a small business on loans because I have seen first hand how one that made this mistake paid heavily for this. Loans come with high interest and quick repayment period and these kinds of terms are not good for a small or just a startup business.

loans are only good for existing Business seeking to expand and they are already established so they can pay off their debt without collapsing. But if one can see where to get a loan with little or no interest then that would be a lot better.

New businesses should go more for personal funding or borrowing from friends and family to pay back. Going to the banks or financial houses to get loans isn't ideal for small businesses. The terms and conditions that come with these loans make them improper for small businesses. So new business owners should know this